And while IGC says on its website that it is rigorously studying cannabis, the company has spent only $137,000 in fiscal 2018 on research and development, according to its annual report. It has spent $274,000 in the first two quarters of fiscal 2019, according to another securities filing. In comparison, the average sum for a Phase 2 clinical trial of a treatment for pain is $17 million, according to CenterPoint, which advises on clinical trials.

But investors who had backed Mukunda’s company over the last year are now left nursing millions of dollars in losses.

The swift rise and fall of the shares of IGC — which started as a blank-check company — is a cautionary tale for investors contemplating the fast-growing cannabis industry. Money has flooded into companies that want to capitalize on marijuana being legalized for medical or recreational use.

With any hot new product, innovation or growth industry — from dot-com stocks to bitcoin — there are companies with sales and earnings and those that chiefly have ambitions. Cannabis companies are no different. Investors would be prudent to learn as much as they can about these companies and their business.

In a statement, IGC said that it “is working very hard every day to succeed in our business lines and deliver value to our shareholders. Any suggestion to the contrary is both reckless and baseless.” “IGC continues to operate in the Asian infrastructure space as well as the medical cannabis industry,” it added.

MarketWatch/Steve Goldstein

Photograph taken Oct. 2 at the address in suburban Washington, D.C., listed by India Globalization Capital Inc. as its headquarters.

White-bearded and bespectacled, Mukunda cuts a professorial figure. His decades-long career began with satellite telecommunications and voice-over-internet phone calls before moving on to commodities trading, real estate investment, and medical marijuana.

Mukunda, 59, grew up in Connecticut and has bachelor’s degrees in electrical engineering and mathematics and a master’s degree in engineering from the University of Maryland. In 1990, he founded Startec Global Communications, a Bethesda-based provider of voice-over-internet-protocol services that targeted immigrants to the U.S. The company went public at $12 in 1997; its stock soared to $29.88 in March 2000.

But then the dot-com and telecoms bubble burst. Startec filed for bankruptcy in 2001, and Mukunda left the company.

He started IGC in 2005 as a blank-check company looking to acquire or merge with businesses operating in India. Over several years, according to a corporate history on IGC’s website, Mukunda’s company bought a stake in a construction equipment leasing business in India; it started trading commodities like iron ore and cement; and it acquired a Malaysian real estate company.

Combined, these businesses generated less than $20 million in revenue in its first years, peaking at revenue of $35 million in fiscal 2009, before that number gradually fell back to just $2 million in fiscal 2014, according to the company’s SEC filings.

But then the potential for marijuana emerged. By 2013, “we started exploring opportunities in the then nascent and emerging cannabis industry as a way to become a first mover in this exciting business segment,” IGC’s website states.

From a standing start, the business developed quickly. IGC filed its first cannabis-related patent — for pain treatment — in 2014. (It has not yet sold any cannabis-based products. In fiscal 2018, it had about $2 million in revenue, all from legacy infrastructure, according to securities filings.)

It has filed another six cannabis patents, including one for Hyalolex, a formula that IGC says can “address the primary indicators of Alzheimer’s, plaques and tangles, as well as alleviate several end points of the disease like anxiety and sleep disorders.”

But health experts have questioned whether a cannabis product can treat symptoms of Alzheimer’s. The American Alzheimer’s Association, viewed as an authority on the disease, declined to comment on IGC or Hyalolex. But it says there has been very little research on the efficacy of cannabis or any of its ingredients in treating the disease or its symptoms.

Mukunda has said in releases and interviews that IGC is pursuing U.S. Food and Drug Administration approval for Hyalolex, and is currently in the preclinical stage, with trials planned for 2019. But the FDA’s website shows no applications for trials from IGC or Mukunda. The FDA declined to comment.

Plans for a cannabis beverage drink also seem unclear. A September press release says the company will combine “the experience of IGC with Hyalolex” with a manufacturer in Malaysia. That country, however, has strict anti-drug laws. “Marijuana or any form of products including CBD oil is illegal in Malaysia,” said Erny Sabrina Mohd Noor, counselor for agriculture at the Malaysian Embassy in Washington, D.C.

IGC said the cannabis-related infusion would occur only in the U.S. “The Malaysian manufacturer plays no role in the cannabis-related components of the manufacturing process,” the company said.

IGC promotes its cannabis expertise, saying in documents that the “depth of our team’s collective knowledge is unrivaled.”

In 2017, IGC’s chief scientific officer, Jagadeesh Rao, was accused of falsifying data in scientific papers published in the Journal of Neurochemistry and in the International Journal of Neuropsychopharmacology according to Retraction Watch, a website that tracks retractions in scientific publications. The journals retracted the articles.

IGC did not respond to questions about Rao and did not make him available. He could not be located for comment.

Dr. Ranga Krishna, the IGC staffer named as co-inventor of a cannabis-based pain treatment in an IGC patent filing, pleaded guilty to felony tax fraud in 2012. He was sentenced to five years of probation, fined $94,090 and ordered to pay another $47,040 in restitution. A consent order in January 2017 from the West Virginia Board of Medicine shows that Dr. Krishna was reprimanded for failing to disclose the conviction when applying to have his license in that state renewed. That board also fined him.

Krishna did not respond to requests for comment left at his office in Brooklyn. IGC did not respond to questions about him and did not make him available.

Professional stock promoters have pushed IGC stock to retail investors, who own 85% of the publicly available shares, according to FactSet. One such promoter is SeeThruEquity, which was sued on Nov. 8 by the SEC. In the civil complaint filed in the Federal District Court in Manhattan, the SEC accused SeeThruEquity and its co-founders of defrauding investors by issuing “unbiased” research reports on certain publicly traded company — including IGC — that were actually paid for by the companies themselves. SeeThruEquity did not respond to requests for comment.

IGC also has distributors that cannot be located. The company said in a press release in March that its partner in Puerto Rico was a company named Dama Pharma. That company was incorporated just three days before IGC’s announcement. Its website is incomplete and shows that it has just one employee. Attempts to reach Dama Pharma were unsuccessful.

IGC has said that it is working with a distribution partner in Germany called Medicann Handels GmbH. A website with that name set up in May 2017 claims to sell cannabis for medical use. A search of the site, which is partly under construction, found no mention of Hyalolex. A page headed “Our Stores” has headings for Oslo, Stockholm, New York, and London, but the page for each of those locations actually shows a map of Central Park. Medicann’s site has no phone number and no email address. Its address is listed as Sesame Street.

“You have to read more about a company than just the headlines,” says Jon Lukomnik, the executive director of the Investor Responsibility Research Center, a nonprofit organization that funds research on how investors and companies make decisions as well as environmental, social and corporate governance research. “Any time a company suddenly announces a pivot to a hot new space like blockchain, crypto or now cannabis, there should be a big ‘buyer beware’ sign flashing for investors.”

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